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Throughout the year we’ve talked each month about capital. And we’ve been doing so in relation to its on-going implosion.

Today, I‘d like to tackle that implosion from a different angle. I’d like us to think about a solution.

No solution can suit everybody. What’s good for capital is bad for labour. From the point of view of capital, the solution has to be what Marx calls ‘de-valorisation’. So, what has to be devalorised? Ie. What must lose value?. And How?

Share price

There’s a couple of issues to clear out of the way before we can get down to real de-valorisation. Two months ago, we were talking about the collapse of the share market, The media had reported that $50bn dollars had been wiped off the value of shares.

Not quite.

$50bn had been wiped off the price of shares. Devalorisation is not about the share price. Devalorisation is a drop in the value of physical goods and machines. Of course, any loss of real value can lead to a drop in the share price. However, that outcome is a matter of ‘can’ – not ‘must’. Indeed, the closure of inefficient production can improve a firm’s bottom line. The prospects of a return to profitability should push its share price up. Share prices register shifts in value. They are not value. The stock-market boom was linked to the general price-bubble and to huge amounts of credit. We began the year by saying yet again why the cliché about a Global ’Financial ’ Crisis is a doubly wrong.

First, what blew out after 2007 was not just a financial crisis. And secondly, whatever 2007-8 was, it’s turned out to be very much more than a ‘crisis’.

Yes, there was a financial panic in 2008.

There’ve been a few more since, And there’ll be more in the not-too-distant future. But the financial domain was only where the implosion of capital erupted. That location is no accident. The Capitalist Mode of Production has always depended on access to credit. That means that every segment is always in debt. Even the world’s biggest banks ‘borrow’ from each other.Some form of money has to be fed into the circuits of capital every second of every day. If that flow is blocked – for any reason – the entire system seizes up. Once bankers become too afraid to lend, the system freezes. That’s what was happening in October 2008. The capitalist state stepped in to rescue the so-called ‘free’ market. Hence, ‘financial’ is utterly inadequate for explaining what’s still going down. But we also pointed out that – by definition – no crisis can be permanent. A patient with a chronic condition will suffer successive crises. They are but symptoms – not the underlying disease.

Similar fevers have been breaking out throughout capitalism for seven years. The Economist in mid-November (14th) carried a feature article about three waves of this upheaval:

‘The world is entering a third stage of a rolling debt crisis’, it writes, ‘this time centred on emerging markets.’

The Economist went on to compare the recent doings of global capital with the gangster trilogy, the Godfather. It quotes Michael Corleone from Part III:

‘Just when I thought I was out, they pull me back in.’

It’s not at all Marxist to describe capitalist as gangsters, Moreover, the rolling debts are more like Star Wars. And like Star Wars VII, this discussion is back to the origins of the implosion. The bankers’ bank – the Bank of International Settlements – warned in June 2007 of a upheaval like the 1930s depression.

Last year, its annual report warned that the steps taken by governments and corporations had done no more than to postpone the day of reckoning. That means that there hasn’t been enough factory closures. China is the prime case of a government propping up firms, and not only state-owned-ones. ‘creating zombie companies and entire zombie industries’, according to the Economist, p. 24) ‘the walking dead’ This year, the Bank seems resigned to the fact that the unthinkable has become the new normal. In short, the global economy is still standing only because the termites are holding hands. Despite eight years of turmoil, the implosion of global capital is side-lined by the Left in Australia.

It’s as if the mighty intellectuals got bored. For instance, only two out of the 104 sessions at the ‘Marxism Today’ programme for 2016 touch on the implosion. If that’s Marxism Today, then Marx wasted his life in writing Capital.

We talked in March about why capital has to keep expanding to survive. That relentless drive results in excess capacity and over-production. Here’s a stunning example of the source of the implosion. Ten years ago, if all the car plants in North America, ie, Canada, the U.S and Mexico, had been shut down, the rest of the world could have produced more vehicles than there was effective demand for them. More car plants closed in the US during 2009. But US capital has shifted the ‘cost’ to its economic and political dominions. Hence, in Australia all three car-makers are to go by 2017. Australia is unlikely to have any steel making by 2020. The shrinkages at Whyalla – 600 more jobs to go – and by Bluescope at Port Kembla are examples of devalorisation to deal with global excess capacity. So is Palmer’s Townsville plant.

This is a good time to repeat the rule that Warren Buffett applies when deciding to invest. What matters is not how much money went into the firm. All that matters is how much you can still get out. Buffet has to be certain that there will be an effective demand for the firm’s products? Has a competitor locked it out by producing better quality goods more cheaply? When that happens, the existing capital stock will be worth no more than can be got for the machines as scrap metal.

2.DEVALORISATION – GOOD AND BAD FOR CAPITAL

The source of the on-going implosion is excess capacity. That occurs from the inescapable il-logic of capital expansion. Hence, the only solution for capital is to kill off some of that excess. Which means what in practice? De-valorise means to lose value. Now we have a further pair of questions to answer. First, how did machines get to be valuable in the first place? Secondly, in what senses do they lose that value?

First question first. How did the value get there?

The answer is essential for the expansion of capital. The machines are valuable because they were made by wage-slaves who added value to raw materials and semi-finished goods. In short, surplus-value is present in the machines. That’s why Marx called the machines ‘dead labour’. They transfer little parcels of that value to each unit of production. The second points to the pain necessary for capital expansion to resume. Before the new machines can transfer any of their deal labour to new commodities, they are themselves commodities. The factory that makes them has to sell them at a profit. Only after that payment can the owners get their hands on any of the surplus-value that their wage-slaves have added. Only after that step can they extract any profit. Some of the profit is for their own living expenses.

Some goes to re-invest on a larger scale for survival. It’s that new investment that interests us today. In a modern capitalist system, the point of disruption from excess capacity is not from the over-production of consumer goods – not unsalable cars, fridges or food. Nowadays, the greater threat is from a seizing up of the effective demand for the machines used to make those consumer goods. In turn, out of that shrinkage comes a seizing up of orders for the machines that wage-slaves use to make the machines that other workers use to make consumer items. The best kind of de-valorisation happens all the time under capitalism. This form of -devaloristion is essential for capital to expand and hence exist.

It occurs in the best years for capital as well as during the worst. This is where a tiny fraction of the value – dead-labour – present in the machines etc passes to the new commodities. However, this process is really re-valorisation on an expanded scale. It is not the same as depreciation. Hence, this loss of value from the machines is intrinsic to the expansion of capital. even while its circuits for expansion are going gangbusters.

Here we see one effect of competition. The socially necessary costs of production can be cut by adopting new production process. One firm introduces a new method. It thus gains an advantage over all its rivals. For a while, the front-runner can take super profits by selling its goods at the old price even though its costs are now lower than the average. In time, all the producers will be forced to switch to the new method – or go bust.

Many will have to so well before their existing machines have given up all the value – the dead labour – present in them. That ‘value has to be jettisoned. This is part of what Marx means by the ‘constant revolutionizing’ of the means of production. This kind of devalorisation is essential for the system as a whole though it is also be very bad for individual cattails. Next year, we shall go more deeply into the acceleration of the pace of devalorisation.

END

A vitally important political point to end. Capitalism is not “collapsing”. It never will “fall over” of its own accord. What we are going through is another implosion in the expansion of social, ie, aggregate capital. We are not watching is a “collapse”. What’s happened since 2007 has been confined to the economic sphere. The fate of Greece is proof positive that the agents of capital retain control of the state.

The Arab Spring is another proof, should any be needed. We must never forget what Lenin told us on this question. Capitalism can pull through any and every crisis – so long as it can shift the costs to working people. It can do that for so long as its agents hold state power.

For capital, the only solution is a massive de-valorisation. its escape can be effected only at horrendous costs to working people.

They also bring risks of political and social upheaval to the rule of capital. For labour, therefore, the solution must be to confront the state that enforces those restructurings. We shall have to replace the covert dictatorship of the bourgeoisie with a dictatorship of the proletariat.

Back next year with more cheery news from the four volumes of Capital.

Neo-liberalism
Phil Ochs ‘Love me, love me, I’m a liberal’ the two notions to make clear are: ‘ideological attacks’ are secondary at best. What counts are the needs of capital.
Introduction
Fourth in series on expansion of capital. Capital has to expand to exist. Profits are only the means to that end. Expansion is not just for individual corporations. They come and under the pressures of competition. Rather, it is AGGREGATE capital that must keep growing.
‘ACCMULATE! ACCMULATE! That is Moses and the Prophets.’ (Marx)
Accumulation is the key to unlock the comings and goings of booms and busts. One is example is the current and continuing blockage to the expansion of capital. The first aims this morning is to make clear that ‘ideological attacks’ are secondary: Take the case of Neo-Liberalism. That set of notions are a consequence of the need that capital has to expand.
The presumption that this ‘idea’ is the cause of anything sows confusion around the Left. Secondly, a general point: a materialist account of how ideas relate to other social practices. Here is a neat passage from Marx and Engels:
Once upon a time, a valiant fellow had the idea that people were drowned in water only because they were possessed of the idea of gravity. If they were to get this notion out of their heads, say by announcing it to be a superstition, a religious concept, they would be sublimely proof against any danger from water. (The German Ideology)

That wasn’t true in the 1840s about gravity and drowning. It is not true today about neo-liberalism and exploitation. WRONG THINKING Nonetheless, the ALP and the ACTU rabbit on about Howard and Abbott making ‘ideological attacks’.
Eg through Work Choices and the Medicare co-payment. Nasty men have bad ideas. This babble also flows from Left grouplets. The fact is that Neo-liberalism is still a pretty good idea for global corporates. WHY do so many different kinds of people get it wrong?
1. LAZY If the attack is the result of an idea, then the Left doesn’t have to think about economics.
2. SAFE for the ALP, to blame ‘an idea’ means they never have to mention capitalism.
3. VANITY makes the intelligentsia feel important if power comes from ‘ideas’. What we produce makes the world.
On this third point here is Engels about how belief in the power of ‘ideas’ gained strength. The process began with religion: ‘fantastic reflections in the mind’ Those superstitions seemed grander than ‘the modest productions of the working hand.’ The priests and overlords got others to do the dirty work. The result was all merit for the swift advance of civilisation was ascribed to the mind, to the development and activity of the brain. Human became accustomed to explain their actions as arising out of thought instead of their needs, which in any case are reflected and perceived in the mind ….
So there emerged that idealist world outlook. Engels regretted that this error afflicted even Darwinians. So, where does ‘neo-liberalism’ fit in today? All needs generate ideas to justify their claims. The bosses represent their ideas as ideals, as ethical statements. Historical materialists know that when ideas are taken up by numbers of people they acquire some social impact. We see that religion. We saw it in the Great War when ‘God was on OUR side.’ Similarly, neo-liberalism as ideology plays a necessary part.
It confuses its victims and legitimises the exploiters. But to repeat: ideas express needs. Needs are class-determined. To repeat: neo-liberalism is a very good idea for most global corporates. The ever-lasting need of capital is to expand. But the obstacles take ever new forms. One small marker of these shifts is in the terms used for the strategy of expansion. Neo-liberalism is quite new. The term does not appear in the 1997 Macquarie dictionary or in the 1999 Oxford Australian dictionary.
In the 1960s and 1970s, Monetarism and Milton Freidman were all the rage. The aim then was to vanquish Keynesian spending. In the 1980s and 1990s, ‘economic rationalism’ came to the fore. The target was to remove restrictions on the trade in goods, services and cash.
Since then, the brand has switched to Neo-liberalism. The aim is to help capital to expand by helping corporations to take over services long provided by the state. Each of these three stages had a particular manifestation of the class struggle. The sixties and seventies saw the workers gaining strength.
The Eighties and nineties brought the backlash in taming the whole labour movement and breaking the most militant. Most recently, the aim has been to abolish organised labour. All these strands have always existed on the wish-lists of this or that fraction within the capitalist class. Yet one or other line of policy becomes dominant in order to deal with each particular pressure on capital’s expansion.
The state organises capital and disorganises labour. Always. All times. All places. The sell-off of government assets got underway in the 1980s. Think of the Commonwealth Serum Laboratories, The Commonwealth Bank, QANTAS and TELSTRA. What those operations had in common was that they were in competition with global corporates.
In the USA, most of those services had never been run by governments. Hence, selling them off did not bring a qualitative shift in the areas open for the expansion of capital.
What is new?
Take two aspects, the political and the economic. One turning point came with the 1997-98 Asian crisis. Revolutions in Thailand and Indonesia taught the IMF a big lesson: if you hollow out the economic power of the state you risk undermining its political clout. After 1998, the IMF call was for ‘effective states’. ‘Effective’ means having the power to control the masses.
Now for the economic front.
What’s new is that capital is being encouraged to expand by shifting into activities long and widely assumed to be the preserves of government. Eg wealth, education and social welfare. Think about each of those realms as a colony to invade – but colonies at home. Some examples The Commonwealth runs its own communications network in Canberra. The Telcos complain that this system deprives them of $100m every year. Defence and others resist the sell-off on grounds of ‘security’. This example would transfer wealth by giving the Telcos the tax revenues. The transfer by itself need not result in the expansion of aggregate capital. However, Telstra could use the extra revenue to expand other aspects of its business.
Centerlink
For some time, much of Centerlink has been a mix of government agencies, NGOs, and global
Corporates. So far, the changes have moved taxes towards the corporates. However, if the unemployed had to pay for these services, the expansion of capital would become direct. This could be done by extending the HECS arrangements to people on NewStart. Should they ever get a job which pays more than the minimum wage, they would be ‘taxed’ to pay for the services that ‘found’ the job for them. This process is not the same as shifting tax revenues to the corporates.
Medicare
The co-payment is only the start. What we can expect is that almost everyone will be forced into buying medical cover from the global corporates. Health will become even more of a commodity.
Transport
A century ago, governments killed of trains and trams, driving people into buying corporate commodities known as cars and fuel. At the same time, construction companies profited out of tax funds for roads and highways. Now, merchant bankers fund tollways as a vehicle for selling access as a commodity. Taxes now take the form of misnamed Private-Public-Partnerships. Each of three words is a lie. Privatise. The Left has absorbed the propaganda of capital.
‘Privatise’ is the corporate’s spin. To make something ‘private’ makes the sell-off and sell-outs sound personal. We should never use ‘privatise’. But always say sell-outs to global corporates. That is the truth of the matter. [There are no ‘private’ schools – there are only tax-funded non-government schools. The only ‘private’ education is home-schooling.]
Results?
Schools and hospitals are sold-off on the grounds that the corporates will produce better results. Opponents of selling off schools point out that the results are rarely better and often worse. That is not an argument against the sell-off. The aim is not to serve the people. The aim is to find a new areas of expansion for aggregate capital.
NAPLAN scores don’t matter. What matters are the numbers on the corporate balance-sheets.
SUM UP
When NGOs and not-for-profits provide services, they do not affect the rate of accumulation. Rather, they are the Trojan horse through which the global corporates get their feet in the door. See how Employment services passed through Mission Australia to Maximus in latest round of contracts.
Global corporates
Three faces:
A. If governments pay them to run hospitals, the firms profit out of taxes. But that arrangement does not directly allow for any expansion of capital. All taxes come from existing wealth.
B. However, the corporates might use the profits from the schools and hospitals to invest elsewhere.That recycling then opens the way to expropriating new values and thus to expansion.
C. If the corporates take over the provision of goods or services on their own account, then they have acquired a new domain for expansion.
This method is direct. B and C are what capital needs most. They promise a path to the next bout of expansion. The era of neo-liberalism is far from over. The crash of 2007-08 did not demonstrate its bankruptcy. Rather, the crash highlighted how essential the neo-liberal agenda is for the next round of capital expansion.
Of course, as with monetarism and economic rationalism, an even newer strategy will become necessary. As ever, the survival of capitalism depends on the next round of its exploiting workers.

Sad news. Humphrey McQueen will no longer be doing his regular segment as he has gotten busy with a writing contract.

We are very excited to announce that this year we will be welcoming contributions from Satyajit Das, Ellen Brown, Jane Kelso and in April Matt Taibbi. We will also record a few longer interviews with Humphrey on some important economic questions.